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Investors take ethical approach

December 2004

Outside institutional investors are taking stakes in Korean companies with high value but weak corporate governance - and are then demanding ethical improvements.

Gweon Seong-chul, president of the Korea Investment Trust Management, told a meeting of American asset management and brokerage companies: 'In the past global investors would shy away from investing in domestic companies with poor governance. Recently, however, their stance has changed to some extent and they actually prefer firms with a weak governance structure.'

The result, he said, was that the calls for improvements were likely to force up stock prices and give investors higher returns.